[Source: Reuters]

President Donald Trump said on Wednesday that he would impose a 10% baseline tariff on all imports to the U.S. and higher duties on dozens of other countries, including some of the United States’ biggest trading partners, deepening a trade war that has rattled global markets and bewildered U.S. allies.

The sweeping duties would erect new barriers around the world’s largest consumer economy, reversing decades of trade liberalization that have shaped the global order.

Trading partners are expected to respond with countermeasures of their own that could lead to dramatically higher prices for everything from bicycles to wine.

U.S. stock futures dropped sharply after the announcement, following weeks of volatile trading as investors speculated about how the incoming tariffs might affect the global economy, inflation and corporate earnings. U.S. stocks have erased nearly $5 trillion of value since February.

Chinese imports will be hit with a 34% tariff, on top of the 20% he previously imposed, bringing the total new levy to 54%. Close U.S. allies were not spared, including the European Union, which faces a 20% tariff, and Japan, which is targeted for a 24% rate.

A White House official, speaking on condition of anonymity, said the higher penalties will take effect on April 9 and will apply to about 60 countries in all. The baseline 10% tariff will take effect on Saturday, the official said.

The “reciprocal” tariffs, Trump said, were a response to duties and other non-tariff barriers put on U.S. goods. He argued that the new levies will boost manufacturing jobs at home.

“For decades, our country has been looted, pillaged, raped and plundered by nations near and far, both friend and foe alike,” Trump said at an event in the White House Rose Garden.

Outside economists have warned that tariffs could slow the global economy, raise the risk of recession, and increase living costs for the average U.S. family by thousands of dollars.

Canada and Mexico, the two largest U.S. trading partners, already face 25% tariffs on many goods and will not face additional levies from Wednesday’s announcement.

The reciprocal tariffs do not apply to certain goods, including copper, pharmaceuticals, semiconductors, lumber, gold, energy and “certain minerals that are not available in the United States,” according to a White House fact sheet.

Following his remarks, Trump signed an order to close a trade loophole used to ship low-value packages – those valued at $800 or less – duty-free from China, known as “de minimis.” The order covers goods from China and Hong Kong and will take effect on May 2, according to the White House.

Chinese chemical makers are the top suppliers of raw materials purchased by Mexico’s cartels to produce the deadly drug, U.S. anti-narcotics officials say. A Reuters investigation last year showed how traffickers often route these chemicals through the United States by exploiting the de minimis rule. China has repeatedly denied culpability.

Trump is also planning other tariffs targeting semiconductors, pharmaceuticals, and potentially critical minerals, the official said.

Trump’s barrage of penalties has rattled financial markets and businesses that have relied on trading arrangements that have been in place since the middle of last century.

Earlier in the day, the administration said a separate set of tariffs on auto imports that Trump announced last week will take effect starting on Thursday.

Trump previously imposed 25% duties on steel and aluminum and extended them to nearly $150 billion worth of downstream products.

Tariff concerns have already slowed manufacturing activity across the globe, while also spurring sales of autos and other imported products as consumers rush to make purchases before prices rise.

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